tv Bloomberg Markets Asia Bloomberg April 28, 2019 10:00pm-12:01am EDT
talking health care. thate talking gdp numbers we got friday. whether or not it is good or bad. yvonne: it came out worse than expected when it came to markets because the dollar took a bit of a breather, as well as the treasury seeing a bit of a bounce. not a whole lot because we have a big week ahead of us. the fed meeting will be key. the -- that will turn the needle. doing -- japan is closed for golden week. you have golden week in china. we are off in hong kong on wednesday. what we are seeing is low volumes and low liquidity. high.i was slightly singapore, the dbs earnings is
what has been fueling that. australia, slightly lower. .ctually extending gains we talked about shares breaking below that 3100 threshold, which we said would be key. you are focusing -- when it comes to that u.s. gdp number -- that industrial profit number for china as well, lifting the mood. the offshore women be seeing some slight lifting. someare not going to have -- they are not going to have year end appreciation. we still see u.s. 10 year yields around 2.50. is there more upside when it comes to treasury yields? take a look at the terminal. that gdp number was interesting
because it was about that underlying weakness that sent yields lower and the dollar heading lower as well. in market continues to price that they are going to cut rates sooner. think that the fed could lower interest rates in january. if you see those fed rates on futures, more than a 50% chance that the next move is going to be a cut by september. anything that jay powell and company can say not to change the narrative will be a key question. a look at first word news with su keenan. with theart in spain socialist party. have won the election. pedro sanchez will have to form a broad alliance. socialists claimed seats in
congress. was47-year-old sanchez forced to call a snap election after he failed to pass his budget. showing is tightening the government narrowing the gap against opposition. the labour party holds the lead. weekend, an extra $2.8 million childcare. to curb thedged refugee intake. move in response to the easter sunday bombings that killed 200 52 people. the government has blamed the killings on an islamic group that had foreign help.
the prime minister has admitted the attacks could have been prevented if agencies had acted on known intelligence. the latest on boeing's problems say they737 max 8 jet will get a software update as trouble remains grounded. the angle of attack disagree alert will be standard on new planes and retrofitted to those already flying. it wasst airlines says only told by boeing that the 737 max 8 jet lacked a key safety alert after the deadliest lion air crash had occurred in october. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm su keenan. this is bloomberg. david: thank you so much.
it is monday but it is pretty much thursday already. have a look at where we are right now. busy on friday and busy today as well. where are we? some psychologic levels. gains as we approach the early weekend. yvonne: let's bring in our editor from singapore to talk through some of these market moves that we have seen. the highlight of the weekend was industrial profits rebound. it was quite a u-turn on the numbers. what does that really tell us about the earnings growth story? i think that overall, the data we have seen out of china has concerned that we have seen the worst of the slowdown.
that is where the story plays out from here. while we may have seen the end of the slowdown, will he get much of a rebound? that it will not continue to accelerate to the downside. that does not mean that we will go back to a wonderful world of positivity immediately. yvonne: let's talk about the holiday effect. we have golden week in japan. we'll be off for 10 days. onkets will close in china wednesday. how does that look for the liquidity picture? we see any flash crashes? >> i am less worried about flash crash risk than some people are. we have a large yen move. certainly, the infrastructure of markets these days are more vulnerable to flash crashes. they trade off and there can be
trigger words that can set off a torrent of moves. certainly, the infrastructure of market is more vulnerable to flash crashes, but that does not mean that we should be set up for one. -- itrlier the holiday didn't kill volatility globally. i wonder if we will get a repeat of that. on the other side, we had the fact that we are getting to the conch period of negotiation on the u.s. china trade deal. tom likes to tweet about japan at this vulnerable moment as well. on top of that, we are going into a vulnerable period for emerging markets. there is a risk that if we start trading, it could get out of control much quicker. david: that is a question of the day.
finally, let me ask you about the fed gdp number out on friday. an anomaly because a lot of components pointing up. then you have the fed this week. the rate cut objections are starting to show up for september. is the u.s. economy that bad? what do i take from this trading that? -- trading there? >> i do think that there is a lack of inflation. u.s. economy is clearly doing ok. we see that in the employment numbers. u.s. economy is doing just fine. talk about a bait cut. it is important to highlight that it is primarily about inflation. they used to be a consensus that there was a close connection between the strength of the economy and inflation. that has long been broken. i think the rate policy is in
reaction to inflation and the lack of inflation, not about poor growth. yvonne: thank you. our editor joining us from singapore. you can follow more on our markets live blog on bloomberg. plenty of commentary analysis from mark and his team of expert editors. david: let's bring in our next guest. us live out of singapore. mitchell, good to see you. let's start things off with the dollar. you think that remains firm. what has led to the dollar remaining supported? >> that is a good question. we had decent u.s. data culminating on friday with u.s. gdp report.
admittedly, some of the underlying measures like private demand looked a little soft. when you look at data outside the u.s. and other countries, it seems that things look pretty weak. data with the pmi's , but also when you look at the fact that we have seen central banks becoming increasingly dovish away from the fed. the fed has become dovish, but the market is pricing in some easing in the u.s. when you look outside the u.s. like the bank of canada, ecb, bank of japan. it is weighed on currencies outside of the dollar, which has helped. generally, the dollar is firm. remains.he u.s. is there anything that jay powell can do in the fed meeting
to change that conviction out there? >> it is very difficult. dovish --well sounds they might sound a little dovish at the meeting. we do not expect any change in policy, but that will not be enough to derail the dollar. despite everything i talked about, the reality is, it is difficult to shorten the dollar. it offers the highest carry. it is still attractive from that perspective, unless things deteriorate. it is difficult in the near term to see the dollar, under any significant pressure. the fed on hold, perhaps slightly dovish on commentary. inflation is still pretty soft, if not growing. efficient.ll not be
david: the euro has had a very big move down. moreu think we will see euro weakness ahead? what does that mean? >> i do think that the euro termnues to remain near downside risk. there is little that can turn that around at this time. you could argue that negativity is in the price. as we go into the second half of the year, we will see some recovery in the euro, but for now, the pressure is likely to remain. it is the fact that you have a lot of data this week and none of it will look especially impressive. told to playost against its dollar strength. that continues. , it ishis environment
difficult to see the euro rally. those currencies most correlating with the euro, the hungarian, are probably going to be the most at risk of a downside of a beaker euros. the dollar correlates with the euro. we might see a little weakness in that dollar as well. what about stimulus? we are not seeing that spillover to europe or china's neighbors. not be the case, given the policy stimulate is domestically driven? -- will not be the case, given the policy stimulus is domestically driven? >> that is a good question. i doubt that we will see stimulus start to have a bigger impact locally. it is not what we saw a few years back when china completely
stimulated the economy through broad-based fiscal measures. aimed at domestic consumption, not really boosting trade. europe andf singapore are likely to benefit significantly from china's stimulus this time around. look at last week. we saw some korean export data and electronic exports in particular. i think that will continue for the next few months to pressure some of these regional currencies. david: does the holiday matter for you guys? does. volatility is very low. there could be flash crashes. think, generally, it will be very soft and quiet activity. key data might have an impact.
yvonne: time for you to take a break. he is joining us from singapore. still ahead, we talk earnings showdown. end of the month deadline looms. what to expect from banks and oil. david: and joining us to talk about health care, companies in china and we will hear exclusively from an education group next. this is bloomberg. ♪
he had the big banks. -- you have the big banks. focus on the banks and oil. analysting in senior for brokerages exchanges. they join us in hong kong. francis, we were talking about the revenue growth. it actually improved in the first quarter. what were some of the key drivers? see the income. it is one of the key drivers. another one could be a more stabilized or improvement of the sales products, driving their agency service fees. theher area would be growth. yasin financing data really
strong in the first quarter. it could also see some appetite in the first quarter results. are among the largest banks in the country. asset talk to us about quality. >> to the surprise of some of the more bearish expectation, the banks have either improved or kept their performing ratios study. against this backdrop, these banks are still making a lot more provisions than a year ago. yvonne: we were talking about them looking more pressured to extend loans to private firms. talk more about the private side.
impressed?stors not -- it is more about the growth potential. the stock has gained more than 20%. i think everybody agrees that they are still a very good stock and they are promised to produce more money and expend more money on expiration side, but the problem is the valuation compared to other peers. it is a little high. people are wondering how much they can gain from the company. there is only really one contender, oil price. beir core business will oil-producing. the oil price can continue going up to the $80 level and i think they are still one of the best stuff in the asian market. >> petro china. the other one is downstream.
give us an expectation. what should we expect? petro china has a little bit of refining, but there income shane production. 60% lower than the year before. markets are expecting revenue profit to slow down a little bit compared to a year ago, but i think the most people that watch closely on their spending -- to spendna promised 300 million on refining. number --biggest world's biggest number. sure that you do invest for the future. that is a number of people watch very closely. the refining part, they have a
lot of private refiners. it is a lower market. -- a lower margin. that will have some impact. ae profit of revenue could be little lower in the first quarter. they have a lot of aging oil fields. they produce oil at a much higher cost. that will be another factory. david: thank you so much for the preview of tanks. -- thanks. -- banks. yvonne: you can catch up with all our interviews today. part of theme conversation and send us instant messages or questions for our guests. this is for bloomberg subscribers only. this is bloomberg.
david: welcome back to bloomberg markets. let's have a look at apple. severalany has moved parental control apps from the store over privacy concerns, denying the move was made to make its features more competitive. the new york times says apple removed many positive growth -- positive programs. hong kong's banking sector is seeing an unusual spurt of recruitment. among operators, they said they would double their headcount to 200 and the next year. its 100d to boost strong team by another 40 people.
risk and compliance officers are the most sought after skill set. refusing a merger discussion. it felt a new low after what former characterize -- alliance leader carlos ghosn was guiding the con -- the company towards a merger. yvonne: take a look at markets. not a lot of stories driving where markets are. that earnings story that we are focused on, dbs really lifting. first quarter profit beating forecast. and i were talking about how this contrasts what we saw from caterpillar last week. it is very much helping local stock. david: absolutely. the highest estimate there.
david: -- :29 in hongis 10 cone kong. saysentral bank governor an interest rate cut is only a matter of time. this after last year's series of hikes. the banks next policy meeting is on may 9 and the governor says any action then will depend on oil prices. the rateemain high, would stay unchanged. 170bank has yet to reverse five basis points in rate hikes last year.
the justice department has told the house judiciary committee that attorney general william barr may skip a thursday hearing on the molar report -- molar -- wants to allow counsel from all sides to ask about the report into the russian involvement in the u.s. election. it is unusual for committee councils to question a witness. severe flooding is spreading in mozambique following the latest cyclone. the governor says five people have died and more than 160,000 have been affected in the largely rural areas where the storm hit. this is the first time mozambique has been hit by two severe cyclones in one season. that is raising concern about climate change. tens of thousands of people meanwhile march through downtown hong kong in the cities biggest demonstration since the 2014
occupy movement. there was a lot of yellow. many were carrying yellow umbrellas. sunday's rally was against an extradition law which threatens to erode the one country, two systems policy. global news 24 hours a day on air and on tictoc on twitter, powered by more than 20 700 journalists and analysts in one hundred 20 countries, i'm su keenan, this is bloomberg. atid: let's have a look these trade talks. the negotiations will resume in beijing. signalingresident xi, approval for the trade war demands. the of the conversation is u.s. may concede to a chinese proposal that would give less protection for u.s. farmer product than they received back. yvonne: joining us now is vikram
in hong kong.s us great to have you. really kind of what this means. this has a lot to do with data exclusivity which has been at the heart of the matter. what impact does it have on the health sector? is an: great question exciting week in beijing. the question is how do you bring world-class innovation to china and be able to commercialize it. logicsortunity to bring into the market. recognizing you have 1.3 billion people who are only getting older and sicker, how do you do that in a more affordable way? if you pull back, the whole thing was to bring best in class innovation to the sickest people in asia. it has been underpinning the record investment we have seen in the sector over the last year. last year was the best year on
record. one of the big things behind that was innovation. investors looking cross-border. a chinese company going abroad to markets like australia not only to get assets -- access to markets but to serve needs in china. interestaw a lot more in early stage investing in china. the government making a push towards building a local innovation system. a lot of investors backing that. in terms of deal size, when they go very early stage, runs the dealsize -- what is the size? deals are also getting much bigger. vikram: we are starting to see the markets in asia really come of age in the last few years. we have almost this barbell phenomenon. you have assets in the early in thethat could be
early venture type deals. pharmae the innovative companies to back? on the side we see much larger deals. in australia, if you look at two of the 10 largest deals globally they were in australia. , andting behind it efficiency play for example when they got together with the chinese corporate to bring it to the therapy company. yvonne: what about for valuations? it seemed like there was a little bit of a winter funding crunch. of valuationsng actually reignite some of these mega-deals to be happening in the health care space? vikram: interesting question. what we are seeing is more pressure on the valuations. especially coming through the growth and buyout stage. the uncertainty around where the economy is going.
this is a sector that is seen to be almost recession resilient. there is a lot of interest in the sector. in the last few years, everybody is flocking to the sector. we are seeing the smarter investors take a much more focused approach. a big part of our business is working in due diligence and we are seeing the smartest investors knowing if they will pay rich multiple coming in, what if your -- what is your proprietary angle? we are seeing that much earlier. as we go into 2019, we see interest continue. momentum is a really solid. we are on pace for strong year. buyingare the chinese everything? it is almost reminiscent of what happened 15 years ago. they were going out and buying natural resources.
they are aging, getting more sick. what parts of health care are attracting the most interest if any? is it basically across the board? vikram: we are seeing across the board. historically a lot of it is in the biofarma sector. or the medical device sector. some sectors where they were behind, being able to leapfrog. what has been interesting is seeing a lot of interest in the health care delivery space. you wouldn't think of it as very obvious. hospitals tend to be local businesses. we are seeing chinese investors looking especially to australia which is a very efficient health care system. how do we get access to large form asset index markets? yvonne: we have seen some of these biotech companies listed starting last year in hong kong. seems to be getting a little bit of a lukewarm response. do you expect the companies you deal with to stay private for some time?
vikram: great question. a sector level, absolute see. it will be asset by asset. we are seeing again with all the uncertainty happening in china with not just the macro but from a policy perspective, the government encouraging the ecosystem, long-term, the macro outlook is pretty strong. frankly some investors are playing by keeping assets private. a bit of a dumb question but what role is technology playing? i know plays a big role. china leads the application of technology globally in a lot of areas. talk to us a little bit about that. vikram: great question. a lot of my clients in asia would ask where do we look for the best innovation in delivery and we would always point them to the u.s. and europe.
today, a lot of our western clients are looking at china. at the evolution of what they have done with good dr. and some of these digital platforms emerging. ardsley coming from the fact that there is an access gap in china. whichever way you look at it. long lines of people waiting to get access to hospitals. what you are seeing is these digital platforms emerging. a lot of investors globally are saying what can i learn? how do i create more asset light system. we are seeing china really leading on innovation from that perspective. yvonne: how supportive has the regulatory framework been in china in particular? it is part of the china 2025 initiative as well, how are the reforms propelling the industry moving forward? can china be a place that makes more sophisticated drugs for example? story being is a written. what gives us comfort if you look at the last 12 or 24 months, we have pushed the
government in terms of the generic side. bulk procurement of generic drugs. on the flipside, record numbers of innovative drugs coming in. i think what many people forget is china with the strong cro sector has a large amount of chemistry talent which is now moving to be more innovative. david: what are people getting sick of in china? what are the fastest growing diseases? i would imagine that is where hopefully the government would come in and nip that at the butt. vikram: it is the usual suspects. diabetes, cardiovascular
disease, some of the highest in the world. and the big delivery gap. if you look at the investment in the last few years, they are starting to play exactly to your point in that direction. how do you bridge the cancer gap? bringof it is focused to the best cancer technology into china. similarly, there is a lot of focus on cardiovascular, diabetes, other diseases. david: thank you so much for coming on the program. that was vikram kapur. up next, we hear exclusively from china education cfo on what they are looking for from schools outside of china. this is bloomberg. ♪
the first half of 2019. the cfo spoke exclusively with bloomberg with where they are seeing the next opportunities outside the mainland. have 200 targets in the country. we have close to 40 targets overseas. we are still looking for some foreign opportunities. when you're looking around at foreign opportunities, where you seeing the biggest potential for growth? we have some requirements. we prefer to be english-speaking. we can communicate with the management team as well as the students and teachers. the other thing, we would like to have some synergy with our school in china.
the synergy will probably come from we can export our student to the school as well as we have the program that we can bring from overseas to our school in to bring it to our students. after taking this program, our students will get a foreign communication in addition to the local. >> there has been an interesting provision by the chinese government on education related services, how will rising regulatory risk add pressure? far, all the regulation have been fair policy for the higher education as well as the vocational education. it is encouraging, especially for what has been announced. earlier this year, china will
boosted by a one million student quota. it is very supportive. the way to go on vocational education is very good. growthare your margin forecast looking? are you seeing rising growth costs perhaps coming ahead? we have been able to improve in profit margin. we have a very effective system. we have the school system which -- we cover the student recruitment, even including the internal control finance. this is a very effective and efficient system which we implement to the school we acquire. going forward, we believe we can
.aintain our profit margins david: that was the cfo of china education bill mok speaking with us exclusively earlier today. the latesta look at business flash headlines. the company plans to cut in half the number of employees at the tokyo headquarters. the paper says japan's biggest bank has said some of the activities performed by some of the staff could be automated. any of the staff will be relocated to the domestic sales position and overseas branches. there could be job cuts, john flynn spoke with job managers in hong kong talking about revenues and cost cuts. was told then review could see cuts at the investment bank with staff to be
informed around midyear. david: hong kong's banking sector is seeing an unusual spurt of recruitment at the virtual banks. lab, one of them will double the hong kong headcount to 200. it says it's venture needs needs to boost and bring in another 40 people headhunters say developers as well as risk and compliance officers are the most sought after skill sets. yvonne: let's take a look at some of the market moves here at the moment. earnings front and center. we talk about the singaporean banks. dvs leading the way when it comes to earnings. we have the ocbc report later on. let's have a look at china, some big movers there as mall in terms of the phar
stock up 7.5%. shanghai international airport also has an earnings story. moving up and down across, a very quiet start to trading across the region in the asian pacific. yvonne: gives us time to look a little bit more at the battle of the charts. yen and rallies in the we focus a little more on the hang seng as well. this is bloomberg. ♪
comparison with the hong kong stock have been in line with the rest of the world. that outperformance could be shifting. politburo coming out saying traders may not support things as much. that is debatable. it looks like they may have hit a cap and there's a lot of things that may have worked in favor of hong kong. the u.s. is pretty strong. who are fund managers really under invested in hong kong right now. record lows in terms of underinvestment. you have earnings coming out too and hong kong tends to trade more on that. a lot of factors that may point to an upturn for those shares. david: can i ask a follow-up on this chart? what am i looking at exactly?
you are looking at a comparison of the cfi 300 versus the hscei. that was to get the comparison of the two author bottom to show to shifting a little bit now. david: ok. it has normalized and we are pretty much back. david: michael, go for it. michael: good morning. my offering today is a daily chart going back to november. you can see on the chart a trend line resistance going back or coming in about 112.40. i think this might get breached either across the golden week on a liquidity squeeze or maybe not bestatement that may as as they infer.
on friday.ayrolls a lot of new term risk coming in. the -- since the fresh crash, it has been pretty constructive. the lows are getting higher as we go. the 26 day average crossed cleared atch, it is least seven times. i think that might be a signal to the market that it might be underweight dollars. aprilfinish at the 112.40 high that we saw, that could move the goal post with the top side of the range being towards 114 and the base would be moved up to around 110.80 depending on how long the market is. there are few risks to get past but they are still your friend. youre: trend is still
friend. i like it because it ties it all into the whole golden week and how liquidity will be a big issue. we have all these big names happening as well while japan is shut. i'm going to go with michael. that -- it isn more topical and no offense against joanna, it is a very strange situation that japan finds itself in. a 10 day holiday that begins today and you have a lot of these risk events on the table and liquidity that is not there. can hope the hong kong outperforms in china. let's go for michael today. david: congratulations. joanna, i guess we will see you tomorrow. are you coming back tomorrow? joanna: sure. [laughter] yvonne: we will make it happen.
david: thank you so much for coming on the program. yvonne: our chart guru says he loves a good clause. we have to bring it to mike this time. david: makes you feel if you are above it. any of thethrough things you see, we have a lot of moving parts. help hist actually early indicators out of china. yvonne: if you like it is the same kind of story that we are seeing. there will be more green shoots during the week. a lot of people are asking about them. take a look at this sediment survey we have. especially when it comes to major onshore stocks. that is looking very strong. property stocks looking good as well. i would say the only outlier is the copper price as well. it is slightly on the weaker
side. david: the more green you get and we are slowly inching our way compared to what we had in january, february, and march, moving to the right side of the graphic. that is ahead of the pmi that comes out tomorrow. we are expecting it to be similar to the prior reading as well. we will talk more about this with our other guests coming up on the program. have a look at futures right now. japan is shut for the next 10 days or so but futures are still trading. yvonne: pretty flat when it comes what you are seeing in the u.s. and japan. funny more coming up. this is bloomberg. ♪
init is almost 11:00 singapore. yvonne: we are entering the last hour of the morning session here in hong kong. prepare for a delusion of data. markets are mixed ahead of an avalanche of eco-and earnings announcements. >> five of china's biggest banks will be offering reports. yvonne: 600 stores every year is the vision for china. ceo kevin johnson tells us why he is so excited about chinese coffee traders. this is "bloomberg markets: asia."
i hope you had your coffee this morning. it is a big week for investors. japanese investors missing all the action. they are out of action until next tuesday for the golden week holiday. india also closed today. we are seeing mixed movement coming through and we are waiting for a number of companies coming through out of china erie and hong kong markets up by about three quarters of 1%. weakness in australia and malaysia today. currency looking a little stronger against the dollar. we are seeing mixed moods when it comes to the commodities market. it is going to be a big week for investors. a lot of holding pat until we get these economic agendas. weeks like this could be daunting for traders and cause them to tie themselves up into
knots. have a look at some of the data we have out of china. profitsseen industrial rebound somewhat. they actually came 13.9 percent in march from a year earlier. positive little bit of coming through the chinese economy. it is all going to be about those pmi's released tomorrow and again on thursday. latest print will be pretty interesting because perhaps it is more important that we have seen when it comes to china pmi's. you're looking for the sustainability. it is going beyond the seasonal factors that the economy is on more of a solid footing. the rebound was quite a turnaround here, perhaps you could say goodbye to the earnings downgrade story in china as well. raja the first world news. model of boeing airplane
remains grounded following two deadly crashes. the angle of attack disagree alert will be standard on new plans and retrofitted to those already flying. the airlines says it was only told by boeing that it lacked a key safety feature after there was a crash in october. won thesocialist have election but the leader will need to form a broad alliance to govern. the socialist claim to 100 23 seats in congress after 10 months at the head of a minority government. 47-year-old sanchez was forced aboard an election. official vote counting in indonesia's election has the president on course to win a second term. opponent about 56% to 44%. the election commission has until may 22 to finish the count.
officials told the bbc that 270 election staff died from fatigue issues. election rates have a poll showing scott morrison's government narrowed the gap against the opposition. holds a two percentage point lead less than three weeks before the vote. weekend, and extra 2.8 million dollars for childcare while morrison exceeded refugee intake. global news 24 hours a day and on tictoc on twitter. 2700 journalists and analysts in more than 150 countries, this is bloomberg. it is a big week when it comes to economic data and major central bank decisions. investors seek insight into the health of the world economy. juliette: we have china's official factory gauge due
tomorrow. that will be closely watched with economists expecting further improvement. officials conclude the meeting on wednesday and they are expected to keep rates unchanged. the ecb is expected to hold rates when it decides on thursday. tapping this week is the release of the u.s. jobs report for april. economists see a gain of 180,000 jobs. that's look ahead to the big week of data. headng us is nader naeimi of dynamic markets at amp capital investors in sydney. i want to get your thoughts on what we can get out of the china pmi's, how did you read the gdp print coming through out of the u.s. which president trump's signaling as a positive sign? was good from far but far from good. strong.line number was the detail wasn't so good. it showed quite the opening in
the underlying half of the u.s. economy. investing. if you exclude the contribution from exports, the actual number was 1.5%, which is nothing to celebrate. yvonne: hopefully a lot to celebrate, it is a very big week. when we look at what we are expecting from china, you are saying potentially a u shaped recovery rather than eigha v? nader: when you look at the markets, markets are pricing to reshape recovery, playing parallel with 2015 and 2016. this time around we have seen the bottom in china's economy, fiscal and monetary policies coming through. pmi should improve.
the turnaround is unlikely to be the same as it was in 2015 and 16, which had affect across the world, not just china. i think the pmi's will show some improvement. i don't see it to be a vgnificant bounce of a shape type recovery. money supply growth, all of the money measures haven't been anywhere near stronger than what they were in 2015 and 2016. public there's a lot of holidays this week. japan pretty much out of action -- it is out of action for the whole week. wednesday, a lot coming through as well. it brings us to have question of the day that our strategists are asking. help? asian holidays nader: i think they hope to liquidity.
get the pmi's coming out if they are worse than expected, you don't get some big moves in the market. for some bigoom moves in the market. it happens to be a big week in terms of data. i expect to see volatility in the market. at the same time, it is hard to read too much into it. you have a market move in thin value him -- volume you don't want to look too much into it. critical.his week is as for the distortion we saw with the march data and government shutdown in the u.s., we are starting to see some april numbers which will be very important as far as what we do in our portfolios. juliette: we have inflation numbers coming out in the markets cap that gdp as a way to price in further cuts that the feds next move will be a cut.
that is as early as september. is this all too aggressive at the moment or can the inflation picture do anything later on today to move the needle on aware yields will go? you look at the numbers that we saw on friday. it was quite a weak outcome. you look at real yields, real bond yields, they actually started to move up. that basically suggests financial conditions are becoming charged now. that is big enough for the fed to actually start talking about cuts, i think it is a bit too early. you probably need to see a mark up all prices, what you can expect higher inflation numbers, they feed into the inflation numbers. i think we are a bit early on that. i expect the fed to basically
have nothing new to say except inflation. can the fed remain patient if markets are still rallying the way it is in the u.s.? exactly right. that is a question -- the mandate which is the inflation and creating asset price bubbles. distortions we have seen in the market. find happens, companies this way to recharge the capital structure and buyback stocks. it doesn't help economic growth. again, regarding inflation, the mandate is to control the inflation and employment. seeing startsare with inflation and wage numbers. it is amazing. we have wage growth but it is
not reflected in the inflation numbers. yvonne: we will have more coming up with nader naeimi, he is staying with us. we talk about u.s. earnings and equities. ahead, we will hear from about thechina ceo growth story and what they are seeing in terms of opportunity in the mainland. juliette: india heads into its fourth phase of voting. we will impact the country performance across the five years in power. this is bloomberg. ♪
vice minister i should say, talking more about the chinese side of the financial corporate, they are staying -- saying it should say stable in 2019. the new foreign direct investment laws. they are drafting rules to implement this new policy and they are expected to release a in the negative list first half of this year. also talking about how they are working to cut the number of people or companies or whatnot that are going to be in the negative investment list as well. we have some lines coming saying they wang will ensure foreign companies complaints will be addressed quickly. that is the vice minister speaking in beijing. big week as wey have been saying. investors will be watching out for big earnings in the tech center. we will be hearing from china telecom and alphabet later today. samsung and apple will be the key ones to watch on tuesday.
yvonne: still with us is nader naeimi, he is in sydney as well. taking a look at some of the conviction calls. it says you are looking to short u.s. dollar equities. you are not seeing much upside when it comes to some of these u.s. equities? where is the potential room for more i guess? nader: i do see limited upside. first of all, when you look for levels to short the market, some technical levels, a look at the chart or s&p 500, it is making the third new high from the correction it had in early 2018. the first high in january and october. now, each of the highs are coming with less momentum. less threat. on top of that you have an extensive market and the data, the topline growth is weakening. 3% gain in the s&p 500
gets to the zone i would like to short it. having said that, if those pmi's are coming out this week, if i see a strong rebound on those , and i see rotation into the cyclical and higher bond yields i will reassess. i don't really see much than 3% upside in u.s. equities. isn't there still a lot of cash on the sidelines? everyone is waiting for the fed tightening and they haven't exactly seen cash deployed into these markets now. should we be expecting it to stay that way? what is your take? nader: that is so true. absolutely, a lot of investors have missed it. the whole rally happened so quickly.
there is no alternative. bond yields are low. caches is on the sidelines. having said all that, equity markers are higher because of the rewriting or earnings growth. topline growth is under pressure. you have seen the styles based on the earnings season we have seen. they are not doing so well. at multiple rewriting. we have already had the dovish pivot. so, there is cash on the sidelines but at the same time there is a trigger for volatility. if that triggers and then you don't have the fed to do another pivot or potentially have to cut , if investors confidence in central bank's ability to have more ammunition gets into question the cash on the sidelines will remain on the
sidelines. at some point it will come to the market. that doesn't stop the possibility of a 20% correction. it is very different from 2008. still 20% correction is quite likely. juliette: take us through why are you cutting back on that em allocation. some of thesefrom emerging-market central banks actually fuel somewhat of a rally in emerging-market stocks? nader: absolutely. if you start to see cuts, global market policy last year they were hiking based on the cutting. the cutting on em is more of a tactical move. at the end of the day and from a valuation point of view, em is a good place to be. when i look at the real yields , thee u.s. equities inflation numbers are coming out. rising real yield doesn't bode
well for emerging markets. on top of that, that could lead to stronger u.s. dollars. the u.s. dollar has been flatlining and now we have seen more and more data that global growth is weak. and growth stimulus is not really feeding into the rest of asia. there is room for a period of u.s. dollar strength. together with rising real yields in the u.s. will pose a challenge for em equities. that is a short-term tactic. i want to get your thoughts honest really a. they have the election coming up. -- potentialentral sector that could move well in this election cycle? which --viously areas it is a binary event now. two sides have different
policies. , if the labor government wins that will be a risk with all the high-yield sectors that offer credit. at the same time, if the coalition win, the actual government taking another term, it will be positive for infrastructure. at thesaid that, look real estate sector in australia and a lot of rate cuts are already priced into the market. have rba on tuesday. there is consensus for cutting right now. if they don't, the rate sensitive part will come under the pressure. for me that is an area i would like to be short. have 30 seconds. the whole market or at least a hedge fund market seems to be shorting volatility. that is at an all-time record with a chart that shows that. why are you long with volatility and what could trigger the
markets to wake up? first of all, i see technical signs that markets look vulnerable. concentrated gains running out of momentum. at the same time we have a lot of triggers. some data coming out and we get a clear read on data that any disappointment could trigger volatility. we have europe, and election in europe. a lot of events that could unsettle the market and put a big? goldilocks. , thank youer naeimi so much for being with us and taking us through your calls. plenty more ahead. this is bloomberg. ♪
of the latest business flash headlines. apple says it has removed several parental control apps from the store because of security and privacy concerns. denying the move was made to make its own features competitive. the new york times said it move many popular programs. havedmit -- at makers filed competition complaints. juliette: a shareholder rebellion may worsen after its board ignored an unprecedented no-confidence vote against ceo werner bauman. they are frustrated with the decision to back bauman and his strategy that led to the $63 billion monsanto take over. valuet $39 billion in partly due to the lawsuit that said the weedkiller round causes cancer. yvonne: china investment group is the new case when it comes to china's bond market.
testing investors with late repayment. let's get to our opinion columnist with her latest column saying it could be a double-edged sword in china especially when it comes to this case with cmig. it is a young firm. they managed to amass ¥230 billion. how does it come at a time when beijing is corporate -- cracking down on shadow banking? >> likes to claim it is a private enterprise. very much so from day one when it was founded in may, 2014. a politicalself as connection. and the newainchild age front with the private money back. onlyso talked about the private enterprise with the approval of the statehouse in china. as a result, it actually had
access to a lot of funding from china's biggest banks, including the policy banks such as the china development bank. this kind of funding is not acceptable to normal private enterprises. he played their best political connections. a talked about investing in indonesia industrial park. juliette: it boasts that it is china's new cyber and fund -- sovereign fund but how is its investment track record? shuli: instead of actually investing in the projects as it has promised to, the first thing it did was buying in shanghai with 20 billion yuan. they spent 60% in that plan. i think the value has come up.
the property market is reviving. just sold it to a developer at a loss. another thing they did was investing in a huge solar farm. we don't know how that is going. china's policy is turning. solardoesn't want the parks to be on the government subsidy anymore. they are just sitting in this huge park that is suffering. i wouldn't say they have a very good track record. another thing is they did the aircraft leasing in one of the plans unfortunately got into an accident last october. so far, it is just a disaster. yvonne: we will leave it there. check out her column. let's take a look at china markets before we go and head to the break. we haven't seen the psi 300.
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almost 11:30 in singapore. we are in the middle of the trading day -- trading day. japan is out of action all week, dbs group very much in focus. jumping out to its first quarter profit. to 1.65.e rising 9% singapore exchange and focus. of china chamber international commerce to help chinese companies use singapore as a base to expand into southeast asia. the singapore wealth firm under pressure today, pretax profit
has declined by 38%. let's get the first world headlines. china's recovery continuing according to a bloomberg economic gate. market sentiment and business conditions, the april numbers have positive signs across stoxx, more business confidence, and sales manager sentiments. the gauge to further policy support may be necessary. baseanka has found coverings from monday in a move preventing muslim mourners from the veil. the government is blaming the bobbling's -- bombings on the islamist group. the prime minister said the attacks could have been prevented if agencies acted on known intelligence. central bank governors has an interest rate cut is only at a matter of time after a series of
hikes. the banks next policy meeting is -- they say it will depend on oil prices and if they remain high, rates will stay unchanged. reverse increases last year. leastvernment says at five people have died in mozambique after the latest cyclone and 160,000 have been affected in the largely rural areas. it is the first time mozambique has been hit by two severe typhoons in one season. global news 24 hours a day on air and on tictoc on twitter. powered by more than 2700 journalists and analysts in more than 120 countries, this is bloomberg. chinese meat supplier wh group is out with earnings today. it tries to limit the fallout from an african's wind and the trade wars between washington and beijing. bloomberg's asia act --
agricultural editor has been checking -- tracking this for us. what you think we could see from this? moment, i think people are very positive about company. shares are up from last october. goldman issued it last week saying they expected record profits in 2020. they should have a share price project of 10 hong kong dollars. it is a generally favorable outlook. it owns smithfield food in the u.s. and also china's largest pork company. it is benefiting from the increase in prices in china and globally as a result of african swine. is there any indication of how much they could benefit from this? especially if there is potential inflation and higher hog prices? james: it is hard to put a percentage on the quarterly earnings, which are coming out
later today. coming up this year they are looking at about 10%-15% increase according to analyst estimates and then rising further in 2020. a steady benefit from the upside in pork prices in china, which is expected over the rest of this year. of course, with smithfield foods as well, they are well-positioned to benefit from exporting more pork to china to fill the deficit. people talking about hog herds slumping, it is huge for world that -- for a country that produces much of the world pork. it is amazing how much pork we consume in china. thank you for joining us out of singapore. let's bring in our next guest talking about more broad implications. our next guest has 25 years of experience in the asia-pacific,
michael boddington's lead consultant of asian agribusiness on animal focusing health industries across china and asia. he joins us from beijing this morning. appreciate the time. tell us how dire this situation is at the moment. can this virus, fever be contained? i think that is a very good point. it is very relevant to realize this is not a new virus. locally, it has been in africa. it first came into europe in 1957. he has had various forms across the european continent. countries have controlled it. it is not a disease that cannot be controlled. it is a disease that systematically needs to be understood. security and safety measures need to be put in place. how is the disease
spreading across asia. you can talk to us a bit more about policy makers, authorities, and their ability to fix the situation? if you think about the disease, it is spread by contact with pig products or pig to pig contact. it is the movement of live animals and pork products, such as meat and et cetera. as you look at the industry, the industry will change shape and structure in response to this challenge. we expect to see the larger farmers take more control of their supply chain. controle better ways to what goes into the forms through the security and what goes into the theater and what people bring into farms. larger farms don't feed kitchen waste. this is one of the major contaminants. as a response to this challenge,
we will see better controls coming in place, which we would expect to eventually control the disease, as we have seen in other parts of europe. it will take time. that is the question that needs to be understood. how long is it going to take and how strong are these security measures going to have to be? all these farmers really cope with it and if you are in a big production, could you be worse off than a small production where you could contain it a little more easily? in your opinion, who is more better equipped? i think the practices that are in place in large farms just give them a stronger advantage to control the disease from coming in. not having the pigot to pig contact and not feeding kitchen waste. that 40% ofonsider
china's hog industry is still in the hands of the small farmer. it is these small farmers that will have to change the way they produce pigs. this includes may be spending more money on ingredients and the feed that they feed the animals. putting up more infrastructure to stop other pigs and people that have been in contact with other pigs coming into the farms. also, the logistics. the trucks that take the pigs away. affectingg that and them in a sanitary way. juliette: it has been interesting to see the impact on the chinese economy because the influx, i have a chart on my terminal showing the pork prices spiking. when you look at this, it is such a staple of the chinese diet, do you think people will have to change their thoughts and may be used chicken or beef?
are exactlyhink you spot on. we have seen pork prices in march of 25% higher than they were at this time last year. that is pushing up the pork price. we have seen chicken prices now in april, 35% higher than they were at this time last year. there is an increased demand. as the pork price gets higher, it becomes closer to the beef price. greaterve we will see a demand or increasing demand for beef as consumers move away from a meet that although the disease doesn't cause any damage, doesn't have an impact on humans, there is this underlying food safety feeling about pork. people will look for something that is appealing more safe. impact china's beef short form increasing. we will see increases in beef. last year there were already 1.5
million tons. we are expecting that to go north closer to 1.7 5 million tons in 2019. where will it come from? obviously australia and new the herds are struggling. we are expecting 70% of the imported beef to come in from brazil, argentina, and uruguay. to the south american countries, this is a big upside to them. talking about the pork trade, it is annually about 9 million tons. that is only equivalent they say to two months of china's consumption of pork. increase the imports, to what extent can global trade volumes fill in that shortfall? michael: you are exactly right. there will be a point where the global excess of pork will not
be out of supply -- able to supply what china is needing. if the african swine virus does track the way that some members -- some observers are assuming. we are seeing that american numbers are up by 4%. you have to consider it takes a considerable amount of time to increase hog inventory. if you decide to start producing pigs today you won't have a marketable pig for the next 12 months. there will be quite a time lag. this creates opportunities for other proteins such as chicken and beef as well. yvonne: you mentioned different types of protein, what about different types of animal feed? you see when it comes to the market positioning, they are short when it comes to soybeans. what can you expect when it comes to demand? michael: that is a very good question. when you look at the shortfall
in hog numbers, the usda's forecasting 90 million hogs reduction from the start of 2018 to the start of 2020. that represents something like 27 million tons of hog feed that is not going to be required to be fed in china. they may be required somewhere else around the world but it is looking like over the next two wl years that will not be required in china. it is a fairly significant component of hog feed and there will be a reduction in the requirement of global soybeans as well. juliette: fascinating stuff. thank you so much for joining us. up, india is in the fourth of seven election phases with the prime minister's economic policies under scrutiny. we are live in new delhi next. this is bloomberg. ♪
fourthe: india holds its of seven rounds of voting today. over is driving discontent the economic policies over the prime minister. let's bring our indian government reporter in. what are we expecting is mumbai heads to the polls? mumbai is heading to the polls today a lot of politicians are promising to fix financial capitals crumbling infrastructure. we have had an interesting race in south mumbai where congress opposition candidate is going against one of the local parties. some endorsements from some of is -- india's richest people. coming out and speaking on one of his endorsement videos.
recommending that he wins. interesting campaigns here. a lot about infrastructure. the economy is on the agenda here. it is one of the most prominent constituencies in india. everyone is watching how that is going this morning. juliette: india was noticeably absent from the belt and road on friday. the nation has fallen behind in its geopolitical foe in the last five or six years or so. what happens there? analysis thisan morning talking about china and india. national security a big part of his electoral campaign. we spoke to a lot of experts that are seeing over the last five years of his rule, india has slipped further behind china. something that has been happening for years. modi has gone out and said he is
tough on national security, he stood up against china in the standoff they had in 2016. we are also kind of watching these different metrics, whether it is diplomacy, military power, cultural influence or economic influence. india has continued to slip behind china, which is their chief geopolitical rival in asia. even if he goes out and advertises the progress he has made on the campaign trail, the sort of evidence on the ground here looks a little bit different. yvonne: it seems like when they come to geopolitical tensions they keep a lid on the pressures. is that why you see it as sustainable here now that we are seeing competition everywhere essentially? exactly. india and china are close trading partners. china is india's biggest trading partner. after that himalayan standoff,
modi and president xi jinping sat down for the formal summit in wuhan. they struck an agreement that india won't cause any problems thisxi as he went into congress they had and xi won't cause any problems for modi as he goes into the election there. the border is long disputed and there is always room for tension. it seems like since that summit, modi was able to keep a lid on something heading into the election that wasn't there. there was some tension we saw with pakistan in february and early march with the military standoff. unlike china, modi was able to use that on the campaign trail. where china is much more powerful on the campaign trail. you can't go on the campaign trail and say you're standing up to a bigger rival. we are going to leave it
yvonne: you are watching "markets asia." coffeee: the ceo of giant starbucks is the company is well-positioned for long-term growth in the chinese market. kevin johnson spoke to bloomberg's david westin. wein: this quarter in china grew our store footprint by 17%. we are on the path to build 600 new stores in china every year. of the growth we have seen a new stores, those new stores are performing financially better than prior generations.
great reception to the new store growth. our same-store comparable in china accelerated and grew at a 3% annual basis. we are super pleased with the fact that we are seeing continued growth in our existing stores but you complement that with the 17% in new store growth in china. the total transaction growth we are seeing is significant. we are pleased with that. david: imitation is a form of flattery, how do you expect that to affect going forward on margins? kevin: we have always had many competitors. since starbucks was founded 48 years ago, we are at over 30,000 stores globally. we always have a lot of competitors. certainly, china is no exception to that. the fact that there is a large growing market for coffee means we expect more competitors to come into the market. certainly, for starbucks we have been in china for 20 years.
we understand what makes a differentiated experience. the combination of what we do in the stores, quality of the beveragesndcrafted that are personalized to our customers in the connection our starbucks partners make with customers is very important. you put all of that together and we have extended that experience in our stores to the digital mobile relationship. you recall, we signed a china digital partner agreement with alibaba that was announced last august. the digital reach we are getting in china is significant as the partnership continues to expand. we feel very good about the experience we are creating in our stores, the performance of the stores, same-store comparables, and the digital reach we get in china. think we are well-positioned for long-term growth in that market. david: we don't hear as much about europe, tell us about that and how is it coming? coffeeour global alliance with nestle is significant.
it brings the starbucks brand to food services, cpg channels, and it brings starbucks coffee on espresso and dolce used to platforms. in march, we announce the first starbucks on espresso dolce gusta platforms. nestle is bringing starbucks to 16 new markets around the world. that will run through september. in the next wave we are going to another 31 new markets. nestle is significant. they have 5 million points of presence in just about every market in the world. our partnership with them is really anchored around coffee. it is anchored around a common set of values. it is really leveraging the nestle reach and the strength to bring starbucks coffee to retailers, mass merchants, food services, and on the world's most popular single certain --
singleserve platforms with espresso. ceoette: that was starbucks kevin johnson. a quick check of the latest business flash headlines. the asian review says it plans to cut in half a number of its employees at a tokyo headquarters. japan's biggest bank has decided some of the functions performed by the 6000 staff could be automated with new robotic and ai technology. any of the current staff will be relocated to the bank's domestic sales division and overseas branches. yvonne: hong kong's banking sector seeing an unusual spurt of recruitment. among the approved operators, they say they will double the hong kong headcount to 200 and the next year and says it needs to boost its 100 strong team by another 40 people. headhunters say system developers, risk and compliance officers are the most sought after. avengers and new again movie is smashing box office records.
earning $1.2 billion in its opening weekend. it is the first film to exceed $1 billion in its opening and break $350 million in the u.s. and canada and 330 million in china. setting box office records and 44 countries. the previous record was held by the earlier avengers movie. ofut a decade ago, a lot investors questioned whether disney should buy that marvel brand for $4 billion, looks like it is paying off for them. i have not seen it, i couldn't get a seat, every theater seemed like it was pretty much crowded and i think it was the first two rows available. i will watch it next week. it is amazing. we talk about this billion dollar debut is really smashing all these records we are seeing. yet the wonder how the future of this franchise is going to be. is this really the end game? we are talking to chris palmeri
out of our l.a. bureau, there might still be some spinoffs whether it is with black panther or captain marvel. i certainly watch that one. it might not be the end but certainly it will be a huge boost for disney overall. at a time one you see netflix really encroaching in the market. you think with the numbers they might try and entice those actors to come back for another end game, should we say number two perhaps. they all seem pretty happy with each other and happy with the films. chris hemsworth from australia, scarlett johansson, lots of big names. yvonne: no spoilers though. people haven't watched yet, including myself. a blockbuster earnings day for china. take a look at some of the companies reporting earnings today. we talked about it, they are in the hundreds. the big ones will be the banks, construction bank, bank of
china, it will be interesting. the auto sector is certainly in key focus today. we will be talking about some of the big moves in stocks as well. juliette: absolutely, particularly here in singapore. gbs is the first of the big banks to come through with its numbers. first quarter profits smashing analyst numbers. raising 9% to one point six 5 billion singapore dollars. --is asia's largest southeast asia's largest bank. we are watching the casinos in hong kong. lifted its price tag on sands china by 22%, saying the company is likely to remain the biggest operator in mass markets for the next five years. seeing good gains coming through from sands. yvonne: on broad market's things
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